Internal audit has always been a topic of discussion. It can be defined as an evaluation process conducted in an organization for examining the overall processes and procedures. Every internal audit that is conducted in the organization has one or more objectives behind its conduction. In the article, we have discussed the objectives of internal audit in detail.
The primary objectives of internal audit are as follows-
- Proper control: The main objective of the internal audit is to keep appropriate and adequate control over the operations of the business to make them more effective and efficient.
- Helping the management: The conduction of internal auditing in the company can be beneficial for the management and can be helpful in so many significant ways. The auditor while performing the audit can point out all the loopholes and weaknesses in the company. The audit in itself is a tool for correct all these errors and mistakes while helping the management in performing in a better way.
- Accounting system: Another objective of internal audit is to evaluate all the accounting systems in the entity. It helps in verifying the transactions, authority over them, and all the correctness of all the entries in the books.
- Protection of the assets: While the internal audit is conducted the protection of all the assets of the company is also assured along with the process. With the help of the accurate and proper asset records and data the auditor can examine the value of the assets.
- Review of the work: One of the many objectives of an internal audit is to review the proper working of the organization and its business operations.
- Identification of fraud or forgery: Audits are also conducted to detect any frauds and mistakes in the company or departments. It helps in minimizing any errors in the accounting books by keeping a regular check on the same.
- Internal Control Checks: Objectives of Internal Audit include checking the internal control in the organization. An effective working of the internal systems is to be ensured.
- Scrutiny of statements: Internal audit also tends to scrutinize the financial statements and books of accounts for any errors and mistakes.
- Liability determination: Conducting an audit means to determine the liability of the employees, members, management, and board in reprimanding their duties and responsibilities.
- Recommendations and suggestions: Providing suggestions and recommendations for better working is also an objective of the internal audit function. This is important for overcoming any difficulties or problems in the company.
- Providing new ideas: Internal audits can help in bringing out fresh and new ideas concerning the operations of the business such as financing, marketing, processing, procedures, etc. The insights of the auditors can be beneficial to provide a new direction to the business.
- Assistance in Independent audits: One of the objectives of internal audit is to help in conducting an independent audit in the company in the future. This means the work of the internal auditor can be helpful for the external auditor and can save money and time.
- Special investigation: The objectives of the internal audit include conducting the special type of investigations and inquiries as and when required that concern with the matter of the business.
- Utilization of resources: As per the internal audit activity charter, one of the purposes of the audit is to determine the efficient utilization of the available resources and minimize any wastage.
- Appraisal based on performance: It can also help in checking the performance of the employees, workers, and members. It serves as a tool for evaluating the management’s work for achieving the goals and aims of the company.